New energy tariffs and people’s welfare

The confusion that erupted with the recent twin increase in the price of Premium Motor Spirit (PMS) and the tariff for electricity in the country is yet to be abated. There has been a lot of hue and cry as to the appropriateness and timing of these increases, which have devastating effects on the living conditions of the ordinary Nigerian. Many are still smarting from the memories of the increases in the price of petroleum products under the Goodluck Jonathan administration and are afraid that a repeat showdown with the authorities by the civil society organisations is imminent.

The battle for the design of an appropriate pricing of petroleum products in Nigeria is an ongoing one. Many have opined that unless this issue is addressed, there would not be any meaningful progress in the efficient delivery of these products to the Nigerian public. These issues have wide ranging implications for the standard of living of the people. They include the issue of smuggling of products to the neighbouring countries, the issue of the functioning of the local refineries and the efficient operations of the downstream sector the oil and gas industry in Nigeria.

The confusion greeting this increase has been accentuated by the condemnation of the government action by the Nigeria Labour Congress, the Minority Caucus of the House of Representatives, the Nigerian Association of Chambers of Commerce, Industry and Agriculture, Academic Staff Union of Universities, Manufacturers Association of Nigeria, YIAGA Africa, Socio-Economic Rights and Accountability Project, Centre for Anti-Corruption and Open Leadership, Centre for Democracy and Development and the Advocacy for Integrity and Development among many others. The general chorus from all these civil society organisations is uniform which is that the increase is unacceptable and should be reversed.

One worrisome thing about the increase is that the proponents of the revolt against the price increase under the Jonathan administration are now in power. Prominent groups such as the Save Nigeria Group (SNG) and many others came out in Ojota, Lagos and organised a huge protest carnival with President Muhammadu Buhari and others fully participating. Ironically, the Save Nigeria Group, a very visible group in the Ojota protest has maintained an unholy silence in the current battle against the increase.

The proponents of the Ojota protest even came up with what they considered to be the appropriate price of PMS, which then hovered around N40 per litre. The narrative then was that the price of N150 per litre of PMS proposed by the government then was unacceptable and should be reversed. At the time the price of crude oil in the international market was in the region of $80 to $100 per barrel and the price of PMS was N97 per litre. In the heat of the public protest, the Jonathan administration reversed itself and reduced the price ultimately to N87 per litre, which the protesters grudgingly accepted and discontinued the protest action.

Incidentally, the protesters under the Jonathan administration are now in power and what one would have expected is that they would “walk the talk” and bring the price of PMS to what they had earlier proposed, particularly with the international price of crude currently at a far lower price of between $35 and $45 per barrel relative to the situation in 2011. Many have thus expressed surprise at this double standard and wondered whether this is a case of gross hypocrisy by the self christened “Change Agents.” Does this not conform the saying that “talk is cheap” and that “action speaks louder than words”? Development cannot take place when men who want power at all cost are in charge because such people are primarily out to feather their nests and can do just anything to achieve their objectives.

One major issue is that, though the deregulation of the downstream segment of the oil and gas sector is deemed desirable by many, the timing for this increase appears inappropriate. The whole world is gradually coming out of the lockdown effects of the COVID-19 pandemic and many people have lost their jobs. Some have had their salaries and wages slashed with inflation on the increase. In addition, government has increased payments of stamp duties on tenancy with interest rates on deposits in banks slashed. With this level of impoverishment, is it proper for government to “add salt to injury” by increasing the price of petroleum products knowing fully well that the increase has inflationary effects? No wonder the latest release by the National Bureau of Statistics indicates that inflation is trending up and the level of impoverishment in the country increasing. This clearly implies that there would be an increase in the misery index for Nigeria, when in other jurisdictions, governments are still delivering palliatives to members of its society still battling with the after effects of COVID-19.

This issue of appropriate pricing also applies to the electricity industry. This increase in the price of PMS happened in a week the Federal Government approved a 300 per cent hike in electricity bills. Must the people be strangulated to death before the economy would improve? Is the government by its actions not strengthening Nigeria’s position as the poverty capital of the world at a time it is busy echoing its intention to lift 100 million people out of poverty in the next few years? Despite years of supposed investment in the energy sector, the country has not been able to enhance delivery of energy to households at efficient prices. Anomalies such as unavailability of pre-paid meters, estimated billings, challenges in the production and the distribution chain of electricity and even in the transmission are preponderant. These are issues, which the new increase in prices is meant to address, by eliminating the subsidy regime.

The civil society should constructively engage the government in the resolution of this crisis and growing confusion. The foot dragging by the civil society organisations is being seen as suspicious in many quarters. What was considered desirable under the Jonathan administration is no longer pursued in the present dispensation. Can the country survive under this double standard? The answer to this critical question should not be allowed to blow in the wind. Reason: welfare and security of the people is captured in the constitution as the primary purpose of government. If there is a failure on this score, the government ceases to be the government of the people.